A new City of Pittsburgh recovery plan floated yesterday could tap commuters to repair roads, bridges, and maybe even the tumbledown pension fund, while largely sparing the wallets of city employees.
Parking taxes might not dip as previously planned, and the city could conceivably ask the General Assembly for hikes in the tax on those who work in the city, or a broadening of the payroll tax to hospitals and other nonprofits.
A product of the state-picked Act 47 recovery team, the 290-page plan needs the approval of City Council, and many of its most controversial tenets couldn't happen without changes in state law that only the General Assembly can make. With top union leaders expressing skepticism yesterday, the introduction sets the stage for six weeks of city debate, six months of labor negotiations, and years of pleas to Harrisburg.
The first political milestone -- mayoral endorsement -- wasn't in place yesterday.
"Everybody wants to get to the same place," said city Finance Director Scott Kunka, but there's room for debate on how to get there. "We're going to make sure there's a plan that accomplishes the goals of the mayor, which are the goals of the citizens of Pittsburgh."
He couldn't yet say if this plan fit the bill.
"The city has done a really solid job of holding its finances together at a time when others nationally have been really pushed and threatened by the economy," said Dean Kaplan, co-leader of the Act 47 team created in 2003. The team wrote a plan in 2004 to guide the city from deficits to surpluses, and now the goal is to deal with more than $1 billion in future pension, health care and workers compensation liabilities for which there's no money set aside.
The goal is to get the city out of oversight at the end of five years, he said.
The team predicts $7 million to $10 million deficits starting next year. It wants to transform that into $20 million surpluses.
One step toward that: Canceling the parking tax cut, from 37.5 percent to 35 percent, that is set for next year under a state law that has pushed the levy down from 50 percent. The revenue not given up would go for things like road and bridge repair, and the General Assembly would have to approve the change.
Cancelling the cut in the parking tax would mean $3.8 million to $4 million a year more for the city, compared to what it would get if it reduced the rate to 35 percent.
That suggestion might "receive a warm reception from the state, since there has been no reduction in parking rates," said Council Finance Chair William Peduto, who endorsed it. Audits and reports have showed that lot operators didn't cut prices when the city lowered taxes.
Mr. Kunka said that Mayor Luke Ravenstahl also favors keeping the parking tax at 37.5 percent.
State Rep. Dan Frankel, D-Squirrel Hill, said there will "need to be some adjustments to the Act 47 plan," but that legislative approval for such changes "will be a difficult challenge, especially among Allegheny County members" of the Legislature.
He said he has requested a briefing by the oversight committee and the Act 47 committee.
Efforts to find the $639 million needed to bring the pension fund up to ideal levels also could lead to a plea for more taxing power.
The team wants the city to boost the $44 million it now puts in the pension fund by $10 million to $14 million a year, even as it reduces the benefits paid to new employees and nudges some into 401(k)-type investment plans.
Mr. Ravenstahl is exploring a long-term lease of the city's parking garages to raise money for the pension fund, and the Act 47 plan doesn't rule that out. If the city can't find savings or revenue windfalls to cover the big pension payments, it could ask the state for the right to boost the $52-a-year municipal services tax on those who work in the city to $145, or hike other city taxes.
Tax-exempt organizations, like hospitals and universities, should give the city $6 million a year starting in 2011, which is triple what a consortium of nonprofit groups has proposed for 2008 through 2010. If they won't pay voluntarily, the city could ask the state to allow a broadening of the payroll tax, which now hits only for-profit businesses, to include tax-exempt employers.
The more immediate fights might come from proposed restrictions on future city labor contracts. Six of the nine unions representing city workers will see their contracts expire at the end of this year.
The plan would give all of those signing on to new contracts a $1,000 signing bonus, but no raise, in 2010, followed by pay hikes of 2 percent in 2011 and 2012, 2.5 percent in 2013, and 3 percent in 2014. Awarding the bonuses next year would be cheaper, in the long run, than giving a raise, said Mr. Kaplan, because it wouldn't boost the base salaries upon which future raises build.
Fraternal Order of Police Lodge 1 President Dan O'Hara, though, said the new plan would put police raises "below cost of living again for the sixth year in a row.
The plan says that new contracts can't include any restrictions on the city's right to hire contractors, change employee schedules, lay people off and decide which unions perform which roles.
Some of those ideas are "violations of state statutes," said Joe King, president of the International Association of Fire Fighters Local 1. "You don't make recommendations in a recovery plan that contradict or conflict with state statutes."
Mr. King saw some things he liked -- like increased Fire Bureau involvement in rescues and basic emergency medical care -- but opposed plans to take disciplinary decisions out of the hands of firefighter trial boards and merge Greenfield's and Hazelwood's fire stations.
Mr. Peduto has set a special council meeting on the plan for Thursday, followed by a public hearing on June 9, and a potential initial vote on June 10.
